The nozzle of the Merlin Vacuum is very large, to help get better expansion ratios since it only ever fires in a vacuum, unlike the 9 sea level optimized Merlins that have smaller nozzles.
This is very obvious when you realize the Falcon 9 first and second stage are the exact same diameter, but on the first stage with normal Merlin engines, 9 engines and bells fit on the base. But on the second stage, only a single Merlin Vaccum fits.
The material the nozzle extension is made out of is somewhat flimsy, all things considered and that ring you see is a stiffener, used during launch to provide some strength so that it does not deform under launch stress. It gets blown out as soon as the engine fires, and the nozzle is under uniform pressure outwards and won't deform.